Tax-sharing talks between Ukiah, Mendocino Co. inching forward

With small and decidedly tense steps, officials from the city of Ukiah and the county of Mendocino are moving carefully toward the goal of sharing sales and property taxes.

Tuesday night, staff from both agencies, along with two City Council members and two members of the Mendocino County Board of Supervisors, met to share sales tax revenue numbers generated for the city by MuniServices, a third party vendor.

"These are not numbers you would find on the city's or the county's ledgers," said City Manager Jane Chambers. "They are purely data, and the purpose of this is to show the trends and the relationship between our revenues over time."

The numbers were separated into revenues collected by the city and by the county, though only within the Ukiah Valley Area Plan. For 2011-12, for instance, the revenues collected by the city were $3.872 million, and $1.639 million for the UVAP.

When the numbers went into projections, however, beginning with the 2012-13 fiscal year, the large jump in revenue caused most of the officials to question them.

"Why did the revenue increase so much -- by $370,000?" asked Ukiah Mayor Phil Baldwin, referring to the numbers for 2011-12 that said the city's increase in sales tax revenue was $196,224, while projecting that the increase for 2012-13 would be $563,590.

"I don't remember that much of an increase in revenue," Baldwin said.

"There may have been (corresponding) increases in expenditures," Chambers said, adding that "sales tax revenues have been trickling back."

Another reason for the significant change in numbers between those two years, Chambers said, is "there was a change in how the data was collected" by MuniServices.

"How far are we from getting the actual numbers from (2012-13)?" Council member Doug Crane asked, and Chambers said "only about two months."

When David Grim, the county's administrative analyst, asked Chambers if the revenue projections included anything from a potential Costco store, she said they did not. The projections beginning in 2012 also did not include the city's Measure S, or the county's Measure A.

County staff also provided numbers that showed how much property tax revenue was generated by six parcels that the city is looking to annex: Lovers Lane West and East, Crossroads Shopping Center, Brush Street Triangle, Laws Avenue and the former Masonite property. In 2007, the properties generated $888,691, and in 2013, they generated $922,195.

"I think we were all struck by how little money it was -- even if we were to annex all of the properties, we would be collecting less than a million dollars to provide services to that area," Chambers said, explaining that the money would likely all be used up by having to hire additional police officers.

"These numbers are depressing," said 5th District Supervisor Dan Hamburg, referring to the lack of economic growth they revealed. "But if they weren't, we wouldn't be here. The question is, is this (agreement) a way to expand the local economy?"

"The value of reaching an agreement is significant, in and of itself," said 2nd District Supervisor John McCowen. "At some point, the value of reaching an agreement is going to outweigh the differences between us."

"I do think there's a tremendous value to doing this to prevent sprawl," Baldwin said, "though I think economic growth will happen in the valley, whether we come to an agreement or not."

Baldwin also said he thought the sharing in the Master Tax Agreement would be "one-directional," meaning it would "likely be from the city to the county for the next 10 to 12 years."

The next tax-sharing meeting is not scheduled until March 11, which McCowen said was at the request of Chambers, because it would allow city staff to have more definitive numbers regarding the city's next budget, and to investigate the large jump in revenue projections for 2012-13.

Justine Frederiksen can be reached at udjjf@ukiahdj.com, on Twitter @JustFrederiksen or at 468-3521.